| BEIJING, June 12
BEIJING, June 12 Chinese state-run oil trader
Zhuhai Zhenrong Corp has entered a one-year supply agreement to
buy Iranian South Pars condensate, in its first term contract
for the light crude oil with the Middle East supplier, according
to industry officials.
Under the deal, the trader will lift two million barrels of
condensate a month from the National Iranian Oil Company (NIOC),
according to three sources with knowledge of the agreement.
Tough western sanctions since 2012 reduced Iran's oil
exports and crippled its economy by choking the flow of
petrodollars, but some of those measures were eased in a
diplomatic deal last November in return for Tehran curbing its
nuclear activities and shipments have been up from last year.
Zhuhai Zhenrong's condensate agreement - equivalent to about
67,000 barrels per day (bpd) and expected to begin later this
year - will be parallel to a contract between state Chinese
refiner Sinopec Corp and NIOC for 70,000
bpd South Pars oil under a long-term deal.
Zhuhai Zhenrong would supply the Iranian light oil to Dragon
Aromatics, an independently-run petrochemicals producer with a
100,000-bpd condensate splitter at its plant in the southeastern
city of Zhangzhou.
"The term supply should commence after Dragon's upcoming
turnaround," said one official with direct knowledge of the
Dragon Aromatics, whose $3 billion facility includes two
800,000 tonne-per-year paraxylene plants, is due for a
maintenance overhaul for three weeks from mid-August, according
to another source.
The sources declined to disclose pricing details, but said
the Iranian firm would supply the condensate on a delivered
basis using NIOC-chartered tankers.
Telephone calls to a Zhuhai Zhenrong spokeswoman for comment
on the NIOC deal went unanswered.
Zhuhai Zhenrong, previously an affiliate of China's defence
authorities in the 1990s, acts largely as an import agent for
Sinopec, Asia's largest refiner.
The trader, which does not have a refinery of its own, has a
separate annual crude contract with NIOC to lift 240,000 bpd of
oil, mostly to supply Sinopec.
Since last year, Tianjin Zhenrong International Energy Corp,
a subsidiary of Zhuhai Zhenrong, has been working as an agent
for Dragon Aromatics, after Dragon won a rare import quota for
condensate and started operations in Fujian province.
Most of the South Pars condensate supplies shipped to the
Dragon plant have until now been on a spot or semi-term basis.
Since the Geneva deal last November, China's Iranian oil
imports have gained sharply, with purchases up more than 50
percent on year and averaging around 620,000 bpd during the
January-April period. That's above pre-sanctions levels of about
555,000 bpd, official Chinese customs data showed.
Condensate is used to produce naphtha, a feedstock for
making petrochemicals such as plastics and synthetic fibres. The
customs data treats condensate as a crude and does not provide
breakdowns of the separate volumes.
China's growing oil purchases from Iran have accounted for
the main portion of Asia's higher imports from the OPEC member
since last year's Geneva deal.
(Editing by Tom Hogue)